It seems an odd time for a small financial services firm to be rolling out a major expansion in North America. Not so, says Tom McKelvey, global COO and leader of the North American practice at Capco. The firm plans to add some 40 partners and 500 consultants over the next year, and its recently added several ex-BearingPoint employees. McKelvey sat down with Consulting to discuss it.
Consulting: What are you seeing that tells you this is the right time for a North America expansion?
McKelvey: I think three things: One is the degree change that's going on in the industry. The level of issue that's in play right now absolutely will change the landscape of the financial services industry for the next quarter century, if not longer. These are robust changes that clients are thinking through. The second would be related to the first: Memory-making consulting is done in challenging times. Third, we see an opportunity. Clients are becoming more sophisticated, and we've heard some critique from clients about what they're getting from the traditional model. So, we've moved to a model that is about experience.
Consulting: Are you seeing positive signs in the financial services marketplace itself?
McKelvey: Things have stabilized a little bit, and that gives us the confidence that now is the right time. Bank earning are up substantially in the last quarter, now that's off a low base, so challenges remain. I think we're looking at very, very modest growth for the next year or so, at least. I actually hope the market doesn't improve a great deal over the coming months. I think we could take more share—and more good share—in a market that is sideways at best, something in the low single-digit growth. Once we're through our growth as a firm, we'll be happy to see a more worthwhile market.
Consulting: Let's talk about the expansion. Where are you as a firm right now?
McKelvey: Capco has always had strategic capabilities that were world class in a niche area and a great set of transformational capabilities. What we're doing now is adding banking capabilities, risk and finance capabilities and a layer of technology. We've also gone to a very nationalized model. As we've embarked on that, we have, in essence, doubled the firm in six months, and we will do double the revenue in Q4 that we did in Q2. And we will double it again by Q2 next year. As far as headcount, we were at 100, now are at 200, and at the end of next year we'll be 500. The firm has always been 70 percent in Europe and 30 percent in North America. Under the growth plan, we'll end up doing about 60 percent of our business in North America by the end 2010.
Consulting: Where is the talent coming from?
McKelvey: My background [with BearingPoint] allowed us to hand select who we wanted from there. There was not an open invitation for that talent base. There was a selection process and that door was only open for about six weeks and that migration process is complete. All said and done, we hired about 40 people from Bearing-Point. The remaining hires are coming out of both industry and other consulting firms. We've acquired talent from the Big 4, Accenture, IBM and the large strategy firms.
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